Results of an 18-month investigation into the pricing and marketing of Gilead Sciences Inc.’s GILD hepatitis C virus (HCV) infection drug, Sovaldi, and its second-wave successor, Harvoni, were released by Senate Finance Committee Ranking Member Ron Wyden and senior committee member Chuck Grassley.
The investigation concluded that Gilead had pursued a calculated marketing strategy and the final wholesale price of Sovaldi ($84,000 for a single course of treatment) was aimed to generate maximum revenue. Affordable access, on the other hand, was not a key consideration in the process of setting the wholesale prices. Materials reviewed under the investigation showed that Gilead considered a number of factors in determining a price for Sovaldi, including costs of the existing standard of care for HCV treatment and setting a high baseline for the next wave of HCV drugs like Harvoni, which was introduced at $94,500. The company has raked in $14.2 billion from sales of the two drugs in the first nine months of 2015.
Gilead is no stranger to the pricing controversy and has often been criticized for the pricing of its HCV treatments, Sovaldi and Harvoni. Last year, largest U.S. pharmacy benefit manager, Express Scripts ESRX dropped Gilead’s HCV drugs for AbbVie’s ABBV cheaper HCV treatment, Viekira Pak.
Gilead’s HCV drugs have been witnessing a slowdown in sales. In the third quarter of 2015, Sovaldi sales plunged 47.6% from the year-ago figure owing to the availability of newer HCV therapies. Harvoni witnessed a sequential fall in revenues due to a gradual decrease in demand from the retail market during the quarter.
Meanwhile, competition in the HCV market is intensifying as several companies including Merck & Co. Inc. MRK are looking to bring their HCV treatments to the market.
Gilead currently carries a Zacks Rank #2 (Buy). Express Scripts is another favorably ranked stock in the broader health care sector with the same rank as Gilead.
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